Latin America’s December Lube Demand Falls, Surplus Widens

Latin America’s lubricants demand fell in December to its lowest level in two years, magnifying the impact of rising base oils supplies and pushing the regional surplus to a two-year high.

Total lubricants consumption fell to around 180,000 tonnes in December, slipping 2% year on year and for a second straight month, various government data showed.

Supply moved in the opposite direction.

Total base oils supply, or regional output combined with US exports to Latin America, rose to more than 215,000 tonnes in December, climbing 34% year on year and for a sixth straight month.

The widening gap between softer lubricants demand and stronger base oils supply risks weighing on import requirements in early 2026 as buyers seek to maintain leaner inventories.

Key Highlights

·         Regional lubricants demand fell as weaker consumption in Argentina, Brazil and Peru offset firmer demand in Mexico and Chile.

·         Fourth-quarter lubricants consumption dropped to less than 590,000 tonnes, slipping 1% year on year and for the third time in four quarters amid a sustained slowdown in key markets including Mexico and Brazil.

·         US base oils exports to Latin America exceeded 170,000 tonnes in December, extending a six-month run of year-on-year gains.  

·         Higher US exports more than offset a third straight monthly dip in regional base oils output that reflected unexpected production issues throughout the fourth quarter.

·         Combined US exports and regional output rose to more than 650,000 tonnes in the fourth quarter, up 14% year on year and the highest volume since the first half of 2023.

·         The surplus of supply over demand widened to more than 30,000 tonnes in December, the largest monthly imbalance in two years.

Market Repercussions

Falling lubricants demand incentivized buyers to keep inventories lean. Plentiful supply made it easier to do so, with replenishment volumes readily available.

The combination of weak demand and healthy supply could put near-term pressure on US base oils exports to the region and push back any repeat of December’s surge to a four-month high.

Any slowdown in Latin America’s import demand would add pressure on US refiners to redirect larger volumes to alternative export markets.